Charting The Landscape Of Cell & Gene Therapy Reimbursement In The U.S.

By Jen Klarer, M.Sc.Eng., The Dedham Group

Cell & gene therapies have already demonstrated efficacy in categories such as blood cancers, sickle cell anemia, muscular dystrophy, and various forms of blindness. While the science itself is transformative, however, our U.S. healthcare system’s reimbursement infrastructure has some catching up to do.

Limitations in government reimbursement structures for cell and gene therapies were learned the hard way. In the earliest CAR-T cases, adequate reimbursements for Medicare FFS patients were very challenging to obtain. Fixed payment bundles for inpatient cases were far below the cost of the product and required more complex billing processes to become whole (e.g., outlier payments).

This is because fixed payments are drawn from the most applicable episode of care, but cutting-edge cell and gene therapies deviate significantly from existing treatment options in medical service needs and total costs at the time of launch. This can quickly leave provider sites at risk of insufficient payment for product and services, with the foundation for reimbursement being far below cost of product alone.

Losses for those early CAR-T cases, on the order of hundreds of thousands of dollars, strained oncology-specialized hospitals and made offering CAR-Ts to government patients unsustainable. Because of this, some leading cancer hospitals instituted patient caps (e.g., limited number treated per month) or referred Medicare FFS patients to hospitals with alternative reimbursement options (e.g., PPS-Exempt hospitals).

Coupling this CAR-T market experience with the increased price of gene therapies, hospital sensitivities naturally extend to other therapeutic areas with significant government patient representation. For example, emerging gene therapies often address needs of younger or underserved populations, increasing case representation in the Medicaid channel. Medicaid’s fixed payment bundling for inpatient and outpatient episodes of care is another example of government reimbursement structures limiting provider sites’ ability to sustainably offer gene therapies.

Some states in the U.S. have recognized this dichotomy and evolved their Medicaid reimbursement rules to better facilitate equity in access by carving out product reimbursement from traditional inpatient and/or outpatient reimbursement structures. This can avoid underpayment for providers while reducing the risk of overpayment from the plan.

States with carve-out policies reimburse for product at acquisition/invoice cost. Some states, such as California, Massachusetts, and New York, have published carve-out policies, while other states may incorporate carve-outs during their plan-provider discussions. Based on the pipeline of high-cost therapies coming to market, state Medicaid plans without carve-outs will face pressure from industry, provider sites, advocacy groups, and patients to follow suit.

Nationally, states are acting on the need to improve sickle cell disease patient identification, information sharing, and treatment by introducing disease-relevant bills. Massachusetts is a great example of a state driving equity in care with a bill that seeks to improve access to and affordability of the sickle cell patient treatment journey. The state also has proposed to enact a Statewide Steering Committee on Sickle Cell Disease. The Committee seeks to (1) increase state-level awareness of standard of care practices and population health dynamics (e.g., incidence, access, morbidity, mortality), (2) increase resource allocation toward sickle cell care (e.g., ancillary care needs such as mental health resources, website-based information, community awareness campaigns, transportation and lodging support availability), and (3) expand relationships with local specialized care centers. Additional states, such as Oregon, are proposing development of a similar committee.

Given that, if passed, this Massachusetts committee would stand in addition to the bundled payment carve-outs discussed earlier, Massachusetts would be positioned to be a key leader in the push toward improved sickle cell disease treatment patient access. Massachusetts’ efforts would improve patient identification and access to treatment journey affordability support (e.g., transportation, lodging) while limiting the potential for hospital financial sensitivity toward Medicaid gene therapy reimbursement with carve-outs. Since Medicaid limits direct out-of-pocket costs due to product or services, patient access to treatment journey affordability support is paramount, particularly for gene therapies. The expense of travel, lodging, and meals to be near one of the select treatment centers certified to offer gene therapy is a primary driver of treatment access issues for patients. For example, in the case of sickle cell disease, 13 states have only one specialized sickle cell treatment center and 14 states do not have a specialized sickle cell treatment center. While most centers are located in dense city centers, patients who do not live in metropolitan areas contend with very far travel to be cared for by specialists.

Other states are joining the charge toward enhancing sickle cell disease awareness and treatment as well and often times in different ways. For example, New York, Florida, and North Carolina have focused more recently on ensuring adequate provider site education of patients, communication of diagnoses across patients’ healthcare providers, and streamlining acute care, respectively. New York passed a bill in 2021 requiring hospitals to provide an educational packet (e.g., screening, treatment options) to patients at high risk of sickle cell disease. Florida passed a bill in June (2023) that drives informing primary care physicians of patient identification via screening as well as active monitoring of Medicaid beneficiaries with sickle cell disease (via registry) to ensure adequate care. North Carolina Medicaid has worked to limit delays in pain crisis management for sickle cell disease by eliminating the need for prior authorization for patient treatment with short-acting opioids.

It is not enough, though, for states alone to carve out gene therapies or allocate additional resources to sickle cell disease management. Provider sites must also be engaged, educated, and supported. Healthcare provider awareness of appropriate billing and coding for cell and gene therapy cases as well as best practices for budget impact planning will be critical to supporting patients’ access to treatment. Healthcare provider understanding of treatment journey needs and costs will better equip the site to establish sustainable reimbursement contracts with payers. Healthcare provider fluency on opportunities for adequate Medicaid channel reimbursement options can directly translate to improved payer negotiation success and increased patient access both in and out of state. Healthcare provider awareness of support offerings available from payers, pharmaceutical companies, and advocacy groups/foundations can help lead patients to the right channels for assistance reaching and affording appropriate healthcare visits and treatment options.

Emerging Reimbursement Frameworks For Cell & Gene Therapies In Other Countries

Reimbursement frameworks have different challenges in ex-U.S. geographies, with a greater role of value-based payment structures. For example:

• In Germany, there are outcomes-based rebates for cell and gene therapies (e.g., Kymriah, Zolgensma) that result in a case-by-case reimbursement tied to individual patient outcomes.
• The U.K.'s National Health Service (NHS) has similarly focused on securing cost-effectiveness agreements with manufacturers.
• Japan has worked toward establishing a well-defined system for evaluating and reimbursing regenerative medicine and gene therapies with the support of the Pharmaceuticals and Medical Devices Agency (PMDA).
• While progress in Canada has been comparatively slower, provincial health authorities are evaluating various models for gene therapy reimbursement.

Moving In The Right Direction

While time will tell, the costs associated with the cell and gene treatment journey are likely to result in delays, rather than barriers, to access in the U.S. market. Ex-U.S., however, costs of product have proven much more limiting to innovative treatment access. There are many challenges remaining to overcome, but these Medicaid state carve-outs are a strong step in the right direction toward equitable access in the U.S.

About The Author:

Jen Klarer, M.Sc.Eng., is a Partner at The Dedham Group, a Norstella Company, and head of cell & gene therapy strategy. With a decade of experience in multi-channel market analysis and strategic access optimization, she is passionate about improving and facilitating access to emerging medical treatments, particularly in the cell and gene therapy space. Areas of differentiated expertise include coverage and reimbursement modeling, provider site activation strategy for optimal patient reach, and commercial operations configuration (e.g., distribution, field execution). Her background includes six years of clinical research in regenerative medicine and skeletal development, including preclinical study of an autologous cell therapy for microvasculature regeneration while at Columbia University.